Is China About to Decentralize?

More than a car, plane or train tick, the “Hukou” (the residential permit system) is the key to mobility in China.

I can still remember what my junior high English teacher said to my classmates and I, “I really worry about you guys; if you don’t study hard, not only will you not be able to get a job, you will probably have nowhere to stay, while the kids from the countryside; at least they will have some land to grow plants on and a house to live in!” (In my junior high school, all of my classmates had an urban hukou.) Looking back, I can’t help but admire my teacher’s far-reaching vision.

I remember about two decades ago, my relatives from the countryside spent a fortune to get their kids an urban hukou. At that time, the “value” of one’s hukou was measured by the rank and scale of that city/town. As one can imagine, hukou for major cities such as Beijing, Shanghai, or Guangzhou are more “expensive” than my hometown Yangzhou.

However, in the past couple years the trend has reversed, especially in the suburban areas of some cities. With the massive real estate development here in China, many lucky “farmers” with rural hukou have received enormous relocation compensation packages, which translate into millions of yuan and several brand new apartments.

Yet despite these changes, the hukou system creates enormous boundaries for us.

For someone like me, having a Yangzhou hukou and living in Nanjing, I have to go back to my hometown when I apply for a visa or any documentation related to my hukou. My future offspring will have to pay special fees and higher tuition to be admitted by the local schools. Even when I go to pay my internet bill, I have to pay a year in advance instead of monthly payments just because I do not have a local hukou. Still, I am fairly lucky because Yangzhou and Nanjing are in the same province. People holding a hukou belonging to another province have to overcome even greater difficulties and inconveniences, to say at the least.

However, do not take it for granted that citizens who have a hukou for the big cities have it made. In Shanghai for example, the local government requires private car owners to pay 40,000 yuan for their license in order to limit the number of automobiles on the roads. Recently, one of my friends who has a Shanghai hukou bought a car in Nanjing, and he could not get a license for his car because the Nanjing authorities worried that he would secure a Nanjing license and actually drive his car in Shanghai in order to avoid paying the 40,000 yuan that the Shanghai municipality requires. He did eventually get his license by proving he is currently working and living in Nanjing and, of course, by pulling some important strings. This is rather ironic when looking back at how people valued a hukou several decades ago.

The shifts in the value of a hokou parallels another interesting shift: many migrant workers are returning to their hometowns much earlier. In the previous years, migrant workers would usually return home right before Lunar Chinese New Year, which typically falls in February, but a large number of them have started to return home in December this year.

The driving factor behind this change is that the cost of living in the cities has risen so dramatically over the past few years, and the money migrant workers earn barely covers their living costs. So rather than struggle through the holiday season, more and more are deciding to go home early and enjoy the time with their families. If these workers can secure work in the countryside, then the big cities could suddenly be facing a significant shortage of cheap labor as the Chinese New Year approaches.

Although China’s urbanization will likely continue, the patterns might increasingly be to smaller cities and towns. In this sense, China’s development may, sooner than any expected, begin to take on the dispersion pattern that has occurred in the Western countries for more than a half century.

Lisa Gu is a 26-year old Chinese national. She grew up in Yangzhou (Jiangsu) and lives and works in Nanjing (Jiangsu).

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